The price of the front-month contract on Brent edged lower and only a day after breaching 128 USD per barrel (USD/bbl) level on a misleading report about a pipeline blast in Saudi Arabia dipped back below 124 USD/bbl.
Clearly, increased volatility and a relatively strong background story have created an attractive environment for the speculative community. According to the Friday’s CFTC report, money managers raised their bets on an increase in the price of oil by another 14 thousand contracts. Moreover, the share of money managers’ short positions on open interest reached the lowest level since April 2011.
As regards the result of Iranian election, it (unsurprisingly) confirmed a strong position of the supreme leader Ayatollah Ali Khamenei. According to Reuters’ political analysts, the direction of foreign policy will thus stay unchanged.
China’s revision of expected growth figures and the stronger U.S. dollar weigh on the price of copper today in early trading. Chinese premier Wen Jiabao cut the growth target to 7.5 percent from 8 percent for this year. He added that the government would put an effort on promotion of domestic demand. As a result, the price of copper is seen at 8500 USD per ton (USD/t) level and aluminium is hovering at 2300 USD/t.
Later this week, a set of China’s data will be released. We think that the figure on imports will be of a particular importance as far as the further development of base metals prices is concerned.